Bangalore: The Union Revenue Department is on the prowl to check evasion of service tax by service providers. A host of corporates such as Wipro-GE Medical, IBM Global services, TNT India, Air India, Jet Airways, Indian Airlines, ONGC Videsh, IIPM and Karnataka State Tourism Development Corporation are being investigated for non-payment of service tax, says K.P. Singh, Director-General, Service Tax, Union Finance Ministry.

Under adjudication

The department has slapped a service tax claim of Rs. 3 crores on Wipro-GE Medical for the period July 2003 to December 2004 for maintenance and repairs of hardware as well as providing software services to clients. "Out of this, Wipro-GE Medical has paid an interim amount of Rs. 59 lakhs. The balance has to be confirmed by the adjudicating authority," he said.

Air cargo and express courier firm TNT India Private Ltd. has run up a service tax liability of Rs. 3 crores from March 15 to June 15 this year.

IBM Global Services has incurred a service tax liability of Rs. 1.41 crore on providing ERP services.

"The investigation against IBM is over, and the order for recovering unpaid service tax from the company will be soon issued by the investigating authority," Mr. Singh said. Training institute IIPM owes Rs 2.2 crores towards service tax in Bangalore alone and its liability throughout the country is put at Rs 23 crores. Both IBM and IIPM were issued show-cause notices on November 7 for non-payment of service tax, Mr. Singh said.

Service providers such as airlines and banks providing MICR facility and online data services and firms providing IPR services are also on the list of entities that have not paid service tax.

The department is seeking to collect about Rs. 100 crores from Air India.

It is also holding discussions with other airlines such as Indian Airlines and Jet Airways for recovering unpaid service tax for providing Computer Reservation System (CRS) services to passengers through third-party service providers abroad such as Galileo.

"With the Government ruling that the service recipient in India has to pay service tax under the concept of reverse charge even when the service is provided abroad by a foreign entity, Indian territorial waters and Indian territory is not an issue anymore for levying service tax. Whether you receive a service underground, over-ground or [via] space, the person receiving the service in India is bound to pay service tax," Mr. Singh stated.

Interacting with ONGC

The department is also interacting with ONGC over certain liabilities, including exploration services undertaken abroad by the company.

Similarly, Karnataka State Tourism Development Corporation has incurred a service tax liability of Rs. 50 lakhs and a show-cause notice was served on the company on November 14, he said.

Mr. Singh urged service providers to come forward and pay service tax voluntarily. "Otherwise, if our officers pick them up, penalty under the law, which can go up to 100 per cent, is leviable from them," he warned, adding that the department has geared up its anti-evasion machinery to recover unpaid service tax.

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